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John Deere and Wacker Neuson Enter a Strategic Agreement



John Deere and Wacker Neuson in strategic agreement

Yesterday, John Deere (DE) announced in a press release that it has entered into a strategic supplier agreement with the Germany-based Wacker Neuson. The agreement will be initially for five years, and thereafter, it can extend in five-year increments. However, Deere didn’t disclose any financial aspects of this agreement.

As per the agreement, Wacker Neuson will supply compact excavators in China, Southeast Asia, and Oceania. It will supply models with capacity ranging from 1.7 tons to 7.5 tons, targeting Asian markets.

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David Thorne, senior vice president of sales and marketing for Deere’s Construction and Forestry segment, said, “In partnering with Wacker Neuson, John Deere is leveraging the experience and success of their innovative and strongly customer-focused products to help us further develop our position in the Asia-Pacific region. These excavators are purpose-built to meet the demands of customers, and will be John Deere branded and sold through John Deere dealers.”

John Deere’s stock performance

On this news, DE stock rose 0.6%. DE continued to recover its lost ground in 2018. On a year-to-date basis, DE is still down ~5.0%. Peers AGCO (AGCO), CNH Industrials (CNHI), and Caterpillar (CAT) have declined 15.4%, 9.9%, and 11.8%, respectively, indicating that Deere outperforms its peers. However, it trailed the S&P 500 (SPY), which gained 7.6%.

The positive for DE here is that the stock has recovered from trading below its 100-day moving average to 2.9% above the 100-day moving average price of $144.38. Its relative strength index 0.62 indicates that the stock is neither overbought nor oversold.


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